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Renter Controversy: Should Renters be Allowed?

Homeowners associations across the country are pondering with an old question that has once again become a topic for many communities: should renters be allowed? Some HOAs are answering the question by placing increasing restrictions on homeowners’ ability to lease out their properties with rental caps, severely limiting the number of homes in a community that can be renter occupied.

Why Say No to Renters?

The belief that renters are bad for a community is one that has been around for some time. Because renters don’t own the homes they live in, some believe that they are less likely to care about the property and the community, and will not maintain proper upkeep or respect the rules. This could lead to neighborhood tensions, decreased property values and possibly even a rise in crime and vandalism.

This belief has led many HOAs to become more active in restricting the number of homes that can be rented within a community, with some going so far as to place a total ban on renting. Others are requiring either homeowners or renters to pay extra deposits or fees to cover the extra expenses that they believe careless tenants will cause.

The Downside of Rental Bans

The fear that renters will decrease property values even further after the housing market collapse is one of the main instigators of the new wave of initiatives against them. But, disallowing homeowners from renting out their properties can also lead to another problem that can damage neighborhoods and property values even more: an increase in foreclosures.

With many homeowners underwater on their mortgages, or having trouble keeping up with expenses in tough economic times, renting out their homes is a good way for distressed homeowners to raise extra funds and avoid foreclosure. In communities that have barred renting, or made doing so prohibitively difficult or expensive, that option is taken away.Many would-be landlords are either abandoning their properties, losing them to repossession, or being forced to sell their homes at a significant loss.

Because foreclosures in the neighborhood decrease home prices all around, some communities have found that keeping out renters is resulting in lower property values and neglected homes; the exact thing anti-rental measures were meant to prevent. When deciding its policy toward renters, an HOA must also consider the further effects of taking away homeowners’ option to rent out their houses will have on the community

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